Samurai demand 09 Lending slowdown 10 Indian public bonds 11
American depositary shares at
US$9 each, down 53% from the
original target of up to US$475m.
IMPRO PRECISION INDUSTRIES also
decided not to open books
on a US$200m IPO after pre-
marketing.
The casualties are not only
IPO applicants. Last Friday, SHARP ,
the Japanese electronics unit of
Taiwan’s Foxconn, cancelled a
global primary follow-on offering
of up to ¥226bn (US$2.1bn) as
the trade friction between the
US and China has increased
volatility in the stock market.
PRESSING AHEAD
Many other companies, however,
are pressing ahead with their
deals as they are worried that an
intensified trade war will drag
the markets down further.
At least 16 Chinese issuers,
including the mammoth float
of up to US$10bn from CHINA
TOWER , aim to raise a combined
US$15.4bn in July. ( See Table .)
The expiring validity of
financial numbers used for
regulatory disclosure and worries
over increasing market volatility
are the main reasons for the
rush, according to bankers.
“Many of these companies
have their financials dated end of
December last year. If they don’t
launch the deals by the end of
June, they will have to update
the financials under the stock
exchange’s rules,” said a banker
on one of the deals.
“It will take at least two
months to update the financials,
which means the floats can only
hit the market post summer.
Market conditions may get even
worse by then, so many issuers
prefer to give it a try now,” said
another banker on two of the
deals.
To raise the chance of getting
the deals out of the door, manyissuers are coming out with
smaller-than-planned floats as
they sell fewer shares at a lower
valuation, say the bankers.
51 CREDIT CARD , for instance, was
looking to raise about US$500m
when it filed a listing application
for a Hong Kong IPO in March.
It considered selling about 20%
of the company at a valuation of
about US$2.5bn back then.
The company, however,
announced a much smaller IPO
of up to HK$1.37bn (US$175m)
last week as it was selling only
about 10% of the company at avaluation of up to US$1.75bn.
“Many of these issuers also
build a shadow book before they
launch the deals to the markets
to ensure at least the base deals
are covered,” said a third banker.XIAOMI SIGNAL
Six companies are also looking to
price floats before Xiaomi starts
trading on July 9, avoiding the
risk of further bad news should
the stock trade down.
“If markets continue to fall,
Xiaomi is likely to make a
disappointing debut and further
dent investors’ appetite for IPOs,”
said a banker on one of the six
deals.
As of Friday afternoon,
mobile phone infrastructure
company China Tower was still
considering whether to start
pre-marketing its US$8bn–$10bn
float on July 2. It is understood
that the company is evaluating
whether it should wait until
Xiaomi’s debut to decide when to
press ahead.
“There is a chance China
Tower will bring its float post
summer if Xiaomi doesn’t trade
well,” said a person familiar with
the situation.
CLSA , Goldman Sachs and Morgan
Stanley were joint sponsors for
the Xiaomi deal. “We have a lot of potential
bond issuers, mostly from
financial institutions,” said
Try Sina, senior manager in
the listing and disclosure
department at the CSX. “Banks,
as issuers, would come later,
next year.”
Another microfinance
institution could potentially
issue bonds this year.
The CSX has come out
with rules to enable investors
to trade corporate bonds
and equipped a new trading
platform. Bonds can be traded
through auction or negotiation.
The IFC also wrote that the
new issue would set a local
pricing benchmark and help
to develop a domestic bond
market, making Cambodian
companies less reliant on
US dollar funding and less
vulnerable to exchange rate
movements.CGIF SUPPORT
So far, only one Cambodian
company has issued corporate
bonds, and that was in the
offshore market. Casino
operator Nagacorp, which is
listed in Hong Kong and rated
B1/B (Moody’s/S&P), in May
printed a US$300m three-year
non-call two bond at a yield of
9.375%.
The Cambodian government
currently sells negotiable
certificates of deposit with
tenors of two weeks to one year
directly to banks. The Asian
Development Bank wrote in itsASEAN+3 Bond Market Guide
in February that the Ministry
of Economy and Finance was
exploring the use of an auction
system to sell government
bonds.
The Credit Guarantee
and Investment Facility, a
multilateral facility established
by the ASEAN+3 countries
with the ADB, is expected to
provide a guarantee to some
Cambodian corporate bond
issues, including the first
offering. It provides credit
guarantees on bonds, mainly
denominated in Asian local
currencies, to bonds from
investment grade issuers in the
ASEAN+3 countries.
Khoo Boo Hock, vice
president, operations at CGIF,declined to comment on
individual transactions.
“Developing bond markets
go beyond getting one bond
issued, as one bond does not
make a market,” said Khoo.
“As such, efforts to encourage
a number of potential issuers
to consider making offerings as
well as nurturing an investor
base for a market to emerge
include many initiatives across
numerous dimensions.”
Another Asian frontier could
soon open for corporate bonds:
the CGIF this month conducted
a corporate bond issuance
workshop in Laos. A panel
of industry experts called for
Laotian regulators to provide
more incentives to encourage
companies to issue bonds. For daily news stories
visit http://www.ifrasia.comJULY IPOS
Issuer Fundraising size (US$) Stage
China Tower 8bn–10bn Hearing on June 28
Inke 193m Pricing on July 4
Tianli Education 169m Pricing on July 4
Intron Technology 106m Pricing on July 5
Redsun Properties 300m Pricing on July 5
51 Credit Card 174m Pricing on July 6
Cangnan Instrument 114m Pricing on July 6
7Road 189m Pricing on July 11
Qilu Expressway 198m Pricing on July 11
Ganfeng Lithium 1bn Bookbuilding on July 9
Cango * 300m US IPO Bookbuilding on July 9
Bank of Jiujiang 503m Trading on July 10
FingerTango 208m Trading on July 12
Canaan At least 1bn Hearing in early July
Ascletis Pharma 400m–500m Hearing in early July
Hope Education 400m Hearing in early July
* Except Cango, all others are Hong Kong IPOs
Source: IFR Asia